US embassy cable - 05DAMASCUS5909

C O N F I D E N T I A L SECTION 01 OF 02 DAMASCUS 005909 
 
SIPDIS 
 
NEA/ELA 
NSC FOR ABRAMS/DORAN 
TREASURY FOR GLASER/LEBENSON 
EB/ESC/TFS FOR SALOOM 
 
E.O. 12958: DECL: 11/12/2015 
TAGS: ECON, EFIN, EINV, PGOV, SY 
SUBJECT: DEPUTY PM DARDARI: REFORMER OR APOLOGIST? 
 
REF: A. REF A: DAMASCUS 5373 
     B. REF B: DAMASCUS 5662 
     C. REF C: DAMASCUS 4977 
 
Classified By: CDA: Stephen Seche for Reasons 1.5 b/d 
 
 1.  (C) Summary.  After a two-week absence, Deputy PM 
Dardari spoke out last week to reassure the Syrian public 
that their government has a plan to deal with any possible 
sanctions the international community may impose on the 
country.  His recent pronouncements (ref A, B) seem to fit 
more with a regime apologist than an economic reformer, but 
his defenders insist it is the cost of doing business with 
this regime.  Whether Dardari,s motivation is simply 
personal advancement or a real desire to contribute to 
positive change by working within the system remains an open 
question.  Irrespective of Dardari,s motivations, two things 
remain clear:  his high-profile pronouncements help shore up 
public support for the regime, and he is viewed as an 
opponent by those within the regime who remain committed to 
the old socialist economic models at the core of Baath Party 
ideology.  Many argue that whether Dardari will be able to 
maintain his position and influence within the SARG in coming 
weeks will depend on his ability to continue to reassure 
average Syrians that their government will defend their 
economic interests.  End Summary. 
 
2.  (C) Deputy/PM for Economic Affairs Abdullah Dardari, the 
SARG public face for its economic reform efforts, has been a 
feature of the state-controlled media in Syria for months. 
He has effectively used his economic portfolio to co-opt 
domestic critics and to combat efforts to internationally 
isolate Syria (ref A).  He has also worked to lessen the 
economic effect of the increasing political pressure on the 
regime (ref B).  For the two-week period following the 
release of the Mehlis report and subsequent passage of UNSCR 
1636, however, D/PM Dardari had been noticeably absent from 
the headlines.  He re-emerged last week to forcefully 
discount rising public concern about the negative impact of 
potential new sanctions on Syria.  In international and local 
media, Dardari was quoted as commenting that the Syrian 
economy is well-positioned to withstand economic sanctions; 
that sanctions would hurt Syria,s neighbors, like Lebanon 
and Iraq that are dependent on transshipment of goods through 
Syria more than they would Syria; that FDI would continue to 
pour into the country irrespective of sanctions; and that the 
SARG had created a committee to counter sanctions, which he 
chaired. 
 
3.  (c) Though Dardari,s statements last week were jarring 
insofar as they associated him with an increasingly 
recalcitrant regime, his defenders explain them as necessary. 
 According to them, Dardari and other reformers like Minister 
for Economic Affairs, Dr. Amer Husni Lutfi, feel threatened 
and are desperate to show their utility to the regime. 
Commenting on Dardari,s recent conspicuous absence, 
independent economist Nabil Sukkar opined that Dardari may 
have felt, like him, co-opted by the nationalist upswing 
following UNSCR 1636.  He pointed to what he viewed as the 
recent re-emergence of people like Minister of Expatriate 
Affairs Dr. Buthayna Shaaban, as proof that those opposing 
economic reform felt empowered by current events.  Dr. Abdul 
Rahman Attar, head of one of the leading Sunni business 
families in Damascus, told us that he recently consulted with 
D/PM Dardari about the current situation.  Dardari told Attar 
that his own position within the government had recently 
deteriorated to such an extent that Dardari felt obliged to 
go to President Asad to ask that Asad clarify to the other 
cabinet members that D/PM Dardari remained in charge of all 
economic issues within the government.  According to Attar, 
Finance Minister Hussein and others had recently 
countermanded Dardari directives and refused to implement 
agreed-upon reforms. 
 
4.  (C) Abdel Kader Husrieh, architect of the SARG,s 
monetary policy reforms, likewise defends Dardari on the 
grounds that the ends justify the means.  According to 
Husrieh,s line of reasoning, Dardari,s actions to lessen 
pressure on the regime are necessary for him to maintain his 
influence with President Asad.  By doing so Dardari 
incrementally advances the cause of economic reform.  Husrieh 
believes Dardari,s continued presence in the government 
allows reformers such as himself to undertake efforts to 
loosen the regime,s control over all economic activity. 
Husrieh believes that without Dardari, the only economic 
advice President Asad would hear would come from the 
unreconstructed socialists. 
 
5.  (C) Husrieh asserts that President Asad,s continued 
commitment to economic liberalization is in part do to 
Dardari,s ability up till now to quiet the markets and 
reassure the public.  As proof of this, Husrieh points to the 
exchange rate, which has shown much less volatility than 
expected following recent developments.  Husrieh argues that 
the SARG lacks the monetary tools to effectively combat the 
pressures on its currency so it must be trust in the SARG,s 
economic message as presented by D/PM Dardari that inspires 
the average Syrian to hold onto pounds and not seek the 
safety of a hard currency.  Though the SARG,s package of 
reforms, which Dardari announced in August (ref C) have 
worked till now to contain the volatility of the pound, that 
may be starting to change (septel). 
 
6.  (C) Dardari,s detractors, on the other hand, claim his 
actions are little more than a smoke screen that allows a 
corrupt regime to maintain the semblance of reform while 
continuing to economically exploit the nation.  According to 
them, Dardari is more interested in managing a media message 
than he is in advancing real reform.  In this more cynical 
view of Dardari, he is motivated largely by his strong desire 
for personal self-aggrandizement.  These contacts insist that 
Dardari,s reform rhetoric is a mask that hides the true 
nature of a regime which exploits every business interest for 
its own advantage.  The system is fundamentally corrupt, they 
argue, and Dardari,s maneuvering on the margins lacks real 
value.  For them, Dardari skews the debate on economic reform 
and makes less clear the choices facing the nation. 
 
7.  (C) Comment.  There is no doubt that D/PM Dardari has 
played an important role in the economic reforms the SARG has 
implemented thus far.  But all unbiased observers agree that 
those reforms have been halting and painfully slow.  Still, 
there does seem to be a clear consensus within the business 
and economic community that Syria is better off with Dardari 
in charge of its economic policy than the alternative. 
However, whether Dardari can maintain his position within a 
regime that feels increasingly embattled remains to be seen. 
The other question, which only Abdullah Dardari can answer, 
is at what point does a very public association with an 
increasingly autocratic government rob an ostensible economic 
reformer of his credibility? 
SECHE